Property tax reform in name only

Express-News Editorial Board

Published 12:00 am, Sunday, July 16, 2017

Photo: Tom Reel /San Antonio Express-News

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Sen. Paul Bettencourt makes his case for his property tax bill to put restrictions on local property tax revenue. Here’s the truth though, cities account for about 16 percent of a property tax bill, according to the Texas Municipal League, a bit higher in San Antonio —22 percent. But local school districts account for 55 percent of property taxes. That means school finance reform, not hamstring cities, is the key to lower tax bills. less

Sen. Paul Bettencourt makes his case for his property tax bill to put restrictions on local property tax revenue. Here’s the truth though, cities account for about 16 percent of a property tax bill, according ... more

Photo: Tom Reel /San Antonio Express-News

Property tax reform in name only

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So-called property tax reform is back on the agenda for the special legislative session, which starts Tuesday.

It shouldn’t be confused with meaningful property tax reform. Meaningful reform might include fixing the appraisal process for commercial property sales, which are kept secret (unlike residential sales). Reform would definitely include addressing the state’s ongoing school finance crisis since local taxes for public schools are the dominant drivers of property tax bills.

But this so-called reform doesn’t address these complicated issues. We can’t state this clearly enough: The school funding imbalance is driving tax bills. All of this banter about cities and counties is a sideshow. Texas needs to spend more money on public schools instead of shifting that cost onto local districts, which raises your taxes.

Here’s why: On average, cities account for about 16 percent of a property tax bill, according to the Texas Municipal League. Here in San Antonio, it’s a little higher, 22 percent. Counties account for even less of your tax bill. But local school districts account for 55 percent of property taxes, according to the Center for Public Policy Priorities.

This isn’t really surprising since state funding for schools has not kept up with the times.

In 2012, the state spent $17.4 billion on education, and in 2016 it was $19 billion, state figures show. But over the same time period, as school populations have grown, local tax dollars went from $20.5 billion to $25.6 billion.

The Texas Senate is ignoring this reality by focusing on capping revenues for city and county governments. It’s bad legislation for three main reasons. It does not provide meaningful tax relief to property owners. It would significantly constrain revenues for local governments. It does not address school funding.

So what does it address?

At best, a very small sliver of your property tax pie. Currently, cities and counties can increase tax rates by up to 8 percent a year. If cities and counties want to go above that amount, they have to hold rollback elections for voter approval. During the regular session, the Senate put forward a plan to cap the tax rate increase at 5 percent.

For some cities and counties, the cap could mean the loss of potentially tens of millions of dollars that fund public safety, streets and parks. It is a potential nightmare for high-growth areas such as San Antonio and Bexar County. For others, the cap might not mean anything. Many counties never hit the 5 percent mark, according to the Texas Conference of Urban Counties.

For example, during the past 16 years Bexar County’s tax rate has increased by an average of 3 percent a year, Judge Nelson Wolff has said. Some years, it’s more. Some years, it’s less.

So, at best, you won’t save much money. Some Texans won’t get any benefit. And some cities like San Antonio will get hit hard.

On top of this, tax bills probably will keep increasing. If home values go up and local school taxes increase, then bills will continue to rise.

This is not meaningful reform. Lawmakers should shelve it and focus on schools. Taxpayers deserve better.